37th Meeting of Koç Group Executives

Speaking at the 37th Meeting of Koç Group Executives, Koç Holding Chairman Ömer M. Koç said “However much good results may boost our confidence, we know that past successes are no guarantee of future ones. We must continue to develop corporate competencies that will enable us to quickly adapt to ongoing changes.”

Commencing his address by paying tribute to Mustafa Kemal Atatürk and commemorating the first centennial of the Turkish Republic, Koç Holding Chairman Ömer M. Koç said “Our Republic is, above all, a project of civilization and enlightenment. It is the “Spark of Civilization” reignited in our country through breakthroughs in education, science, art, and culture. A just and democratic Republic is the sole guarantor of the welfare, peace, and happiness of all segments of society.”

“Turkey is a country whose strength arises from its economic dynamics and its historical and cultural ties”
Pointing to the crucial need for structural reforms, Mr Koç said “The principles espoused by Mustafa Kemal Atatürk, particularly those pertaining to peace and security, must guide our actions as we pursue our national interests. In this regard, it’s encouraging to see the government actively working to alleviate issues in our foreign relations. This approach will also help to better manage our country’s economic vulnerabilities. However our most pressing need is to take action to address our domestic challenges. Once our country’s upcoming local elections and the political uncertainties they lead to are behind us, it’s going to be essential to focus on the structural reforms that our nation so greatly needs. Turkey is a country whose strength arises from centuries-old, deep-rooted institutions, economic dynamics, and historical and cultural ties. As a new world takes shape, all we need to unleash this potential and ease the way forward for our country is a truly just and secular democracy.

“We remain cautious about the global economic outlook”

Sharing his views on the global economy with his audience, Mr Koç said “Around this time last year the outlook for the global economy was much gloomier; the outcome however turned out to be not as bad as was feared. After peaking at a four-decade high in 2022, global inflation has been in decline this year while global growth is holding at a reasonable 3%. It seems that the “soft landing” has in fact been achieved. However there are still huge disparities at the national and regional levels. Europe has been unable to achieve adequate growth; this is particularly the case in our two biggest export markets: the UK and Germany. The global economy is likely to remain on the same course next year while regional disparities will also persist: US economic growth for example is going to slow down this year.

“Recovery in Europe will likely be marginal: 1.2% rather than 0.7% perhaps. Europe is becoming increasingly less competitive in the global economic arena. In the year ahead we will need to keep a very close watch on commodity-market volatilities that might be triggered by geopolitical events and we must manage our risks accordingly. Lower international market interest rates on the other hand may give rise to attractive borrowing opportunities that we should take advantage of when necessary. To sum up, we need to be cautious about global economic developments because of the huge impact that they have on our business.”

“As it contends with China, the US is wooing India and its emerging economy as an ally”

Turning to the unfolding struggle for global hegemony between China and the US, Mr Koç said “The US is looking to shift its diplomatic, economic, and military focus to Asia-Pacific; however conflict in the Middle East and Ukraine prevents it from doing so. For the moment, the United States and China are competing mainly to be the dominant force in trade and technology. The West should not treat China’s rise as a threat; neither should it ignore the potential for cooperation with China. This would be in the best interests of the whole world.” Noting that the world’s attention was drawn to India after its population surpassed that of China and its successful moon landing, Mr Koç said that although the US is wooing India and its emerging economy as allies in its rivalry with China, India is loath to burn any bridges with its stronger neighbor despite the problems in their relationship: “Even though India’s more open to relations with the US than ever before, it’s not going to enter into an alliance with that country.”

LEVENT ÇAKIROGLU:
“WE’LL CONTINUE TO STRIVE WITH ALL OUR MIGHT BECAUSE WE KNOW WE HAVE A RESPONSIBILITY TO DO BETTER”

During his address at the 2023 Meeting of Koç Group Executives, Koç Holding CEO Levent Çakıroğlu said that the Koç Group is in the forefront of efforts to make the economic aspects of the Republican vision a reality: “We contribute to the greatness of our country and its Republic not just through our efforts at home but also through our achievements all over the world. As it embarks on its second century in business, the Koç Group will continue to champion Republican values. For our own part, we will strive with all our might because we know we have a responsibility to do better.”



Taking the podium at the 2023 Meeting of Koç Group Executives after Chairman Ömer M. Koç, Koç Holding CEO Levent Çakıroğlu began his remarks by pointing out that Koç Holding is in the forefront of efforts to make the economic aspects of the Republican vision a reality. “As a corporate group that is almost coeval with the Republic, we are proud that our investments in economic and social development have played a key role in our country’s modernization. We contribute to the greatness of our country and its Republic not just through our efforts at home but also through our achievements all over the world. As it embarks on its second century in business, the Koç Group will continue to champion Republican values. For our own part, we will strive with all our might because we know we have a responsibility to do better.” After these introductory remarks, Mr Çakıroğlu went on to tell his listeners first about Koç Holding’s investments, sustainability efforts, digital transformation programs, and corporate strategies in 2023 and then about the company’s future goals and vision.
Sharing his opinions about ongoing rivalries among the United States, Europe, China, and India, Mr Çakıroğlu also made a number of important statements about global economic worries, technological developments, and production.

“We performed extraordinarily in a challenging year”

Referring to the successes that the Koç Group had achieved during the year, Mr Çakıroğlu said “Koç Group companies’ shares account for 21% of Borsa İstanbul’s market capitalization. On a USD basis, Koç Holding’s own shares have appreciated in value by about 14% since the beginning of the year while its market capitalization reached USD 12.6 billion. Koç Holding is BIST’s most valuable company, while its Tüpraş and Ford Otosan subsidiaries rank third and fourth respectively.”

Noting that the Koç Group had demonstrated an extraordinary performance during a challenging year with the aid of its transformation vision and digital competencies, its data-driven decision-making processes, and its human resources, Mr Çakıroğlu said “S&P just recently increased Koç Holding’s local-currency long-term credit rating from “B+” to “BB-” and assigned a positive outlook. I sincerely congratulate you and every member of your teams for the extraordinary performance that was achieved in a year which began with fears of global recession, in which growth rates in our biggest export market–the European Union–slowed down significantly, which witnessed continued conflict in our region, and in which our country suffered a disastrous earthquake.
Turning his attentions to the year’s major investments, Mr Çakıroğlu said “We’re continuing to invest in our existing business lines while also entering new ones. Arçelik’s plants in Egypt and Bangladesh will come on stream in 2024. Ford Otosan is continuing its investments in line with its goal of positioning itself as Europe’s biggest manufacturer of electrically-powered commercial vehicles. This company also introduced a new Transit Custom model at its Yeniköy plant under an investment plan whose total value is two billion euros. Production of a new Courier also commenced at our newly-acquired Craiova plant in Romania. The aim of all these investments is to increase Ford Otosan’s aggregate annual production capacity to 900 thousand units. Tofaş for its part remained the market leader thanks especially to the success of one of its models.”

“The urge to protect critically important technologies thwarts collaboration”

Noting that industrial production is steadily losing force in Germany, a country that once was one of the world’s manufacturing powerhouses, Mr Çakıroğlu said “We’ve been seeing governments playing an increasingly greater role in their countries’ economic affairs in recent years. We also see that the reasons for this tend to be rooted in inter-national and inter-regional structural measures taken to ensure the security of strategic inputs–principally food and energy. For example, labor productivity in manufacturing industries has been in steady decline in the United States for a decade. This attrition in manufacturing productivity has a perverse impact on that country’s ability to compete internationally. We see that Europe is also suffering from similar problems.”
Global competition is also stifling technological progress said Mr Çakıroğlu, who added “The US is still the world’s biggest producer of technology and its biggest economy, with the European Union ranking third after China. At the same time, countries are also competing with one another ever more fiercely in technology. The problem with this is that the urge to protect critically important technologies thwarts the collaboration that technological progress demands. Economic-security concerns have much greater impact in the area of technology while protectionist policies prevent the world from realizing its full potential. Growth in China, the engine of global growth for so long, has been relatively weaker in recent years. Despite that, the country’s vast economics of scale and its accumulated momentum in technology and manufacturing continue to have a globally transformative impact.”

“Our carbon-transformation program continues to boldly move forward”

Pointing out that the success of the Koç Group Carbon Transformation Program is being nourished by sustainability-focused investments that benefit from low-cost green financing while also achieving science-based emission reduction targets, Mr Çakıroğlu said “Three years ago we launched the Koç Group Carbon Transformation Program so as to manage our low-carbon economy transition processes more systematically by focusing on more ambitious targets. Since then, group companies have been setting and committing themselves to ambitious, science-based emissions-reduction targets. As a corporate group we are highly sensitive to environmental concerns, which is exactly as our customers, investors, and employees wish us to be. That said, we’re also aware that we’re responsible for managing substantial  economic assets; for that reason, our investment decisions must also be economically meaningful. This is why low-cost green financing vehicles pose such significant advantages and why we are so pleased that in September and November of this year, first Arçelik and then Yapı Kredi floated sustainably-indexed eurobonds totaling USD 800 million in value.”


PROFESSOR DARON ACEMOĞLU: 
 “AI CAN UNLOCK THE DOOR TO MANY OPPORTUNITIES FOR TURKEY”

In his presentation during the 37th annual meeting of Koç Group executives, Dr Daron Acemoğlu highlighted six major global trends that he believes will dramatically reshape the future.

In a presentation made at the 37th annual meeting of Koç Group executives, Professor Daron Acemoğlu warned that six major global trends will shape the future and said that they posed both challenges and opportunities. “I believe that while these six global trends will upend the world order and pose major challenges, they will also present major opportunities for every country, especially Turkey” said Dr Acemoğlu, adding “Briefly put, these six trends are: automation and artificial intelligence, along with the inequality they can lead to; demographic change as populations age; climate change; macroeconomic imbalances; globalization; and the crisis of democracy.”



“Countries don’t need to experience poorer macroeconomic performance just because they’re aging faster”
Noting the demographic change can be transformed into a opportunity through automation, Dr Acemoğlu said “The average age of the world’s population is rising. We’ve been seeing this in countries like Japan, South Korea, and Germany for some time but the rest of the world is also getting older. No country–including Turkey–is truly prepared for this. This too could be an opportunity however. Countries don’t need to experience poorer macroeconomic performance just because they’re aging faster. In fact, we’re seeing that investment in automation is on the rise in aging societies and that automation can lead to big improvements in productivity when used appropriately. The key point is that when we look at South Korea, Japan, and Germany, we see that they’re using automation in ways that boost productivity.”

“Globalization hasn’t ended and it isn’t going to; it’s evolving”

Pointing to structural changes currently taking place in globalization, Dr Acemoğlu said “The world system relies on globalization. We know this. But we also know that the impact of the complex supply chains that have emerged over the last three decades on productivity and stability has been both good and bad. What we’re seeing today is that globalization “as we know it” is slowing down. One of the reasons for this is the growing perception that complex supply chains are fraught with risks. Another is that competition between the United States and China has intensified; thus there has been a significant decline in Chinese imports into the US for example whereas we’re not seeing anything like that in US trade with other countries. What we are seeing though is that supply chains are being “localized”, which causes problems for countries such as Turkey whose economies rely on exports. But even here, there are opportunities. This “new” globalization will also give rise to new possibilities; but those opportunities will also arise from potential gains in productivity. Globalization hasn’t ended and it isn’t going to; it’s evolving. And as it evolves, it’s likely that properly productive export products that make proper use of technology will gain importance.”

“Democracy helps power economic growth”

According to Dr Acemoğlu, democracy plays a critical role in economic development. “Democratization accelerates countries’ economic growth. When we look at countries emerging from dictatorial regimes for example, we see that they may have a tough go of it for the first four or five years but after that, they begin growing rapidly. Over the ensuing two decades, the same countries see their GDPs expand by about 20%. What I’m saying is that democracy helps power economic growth. That said, democracy also seems to be undergoing a crisis nowadays. There are many reasons for this but one of the most important is that popular support for democracy is in decline. The world’s democracies have been underperforming for the last two decades. To reverse the decline in democracy’s popularity, people need to see that democracy is generating economic growth; that it’s reducing inequality, delivering political stability, and not enabling corruption. Another important reason is the manipulation of people’s behavior through disinformation. Democracy thrives on information but it is at the mercy of those who control the information. The more manipulation there is, the less democracy works and the less support there will be for it.